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Hazel Park, Northville mount thoroughbreds to escape closure

The return of thoroughbred racing to Hazel Park Raceway and its advent at Northville Downs, the tracks say, is a desperation move aimed at staving off closure.

Without it, both say it's just a matter of time.

The Michigan Gaming Control Board's executive director, Rick Kalm, on Jan. 21 authorized the tracks' request for the shift from standardbred — or harness — racing under a tentative five-year contract agreement with the association representing thoroughbred horsemen, the Michigan Horsemen's Benevolent and Protective Association.

Harness racing will see a shorter season this spring before the tracks convert fully to thoroughbred.

The shift will mark the return of thoroughbred racing to Hazel Park Raceway for the first time in 30 years and its arrival for the first time ever at Northville Downs, which has operated as a harness racing track since its 1944 opening.

Operators are hoping the move will buy time in the face of declining interest in the sport and competition from casinos, Internet betting and racinos in nearby states.

"Call it a Hail Mary," said Dan Adkins, vice president of Hartman and Tyner Inc., whose principals own the Hazel Park Raceway. "The positive impact of this is the fact that we're not closing the track."

Pari-mutuel betting has been declining nationwide for years, he said. And the industry has been unsuccessful in legalizing in Michigan other options such as instant gaming or instant online or smartphone wagering where bettors get certain pari-mutuel information but don't know which race they're betting on.

"Without being able to add slot machines or other gaming, we're going to go for thoroughbred," which attracts more wagers and, traditionally, more fans, Adkins said.

The raceway also believes night-time thoroughbred races could give it an edge in attracting national simulcast agreements with live broadcasts of its races at tracks around the country, given less competition in that market, he said.

According to a Michigan Gaming Control Board report, Hazel Park Raceway received $9.7 million of the $67 million wagered on simulcast and live races at the track in 2012. But the track has lost close to $1 million a year for the past 10 years, Adkins said, noting revenue last year fell 18 percent from the year before.

Harness talks break down

The new deal with the thoroughbred association follows a breakdown in negotiations last summer between the tracks and the Michigan Harness Horsemen's Association. At issue was the tracks' desire to restructure the simulcast purse pool, said Executive Director Phil Stommen.

The simulcast purse pool is the 40 percent of the net commission that's deposited by the tracks into a pool shared by the standardbred, thoroughbred and quarter-horse horsemen racing at the state's tracks.

The tracks take a gross commission of 20 percent to 22 percent on average on the simulcast wagering at their track, according to the Michigan Gaming Control Board. Out of that comes a host fee for the tracks hosting the live races being simulcast and a state tax amounting to 3.5 cents on every dollar wagered.

The remaining net commission is split, with tracks retaining 60 percent and 40 percent going to the horsemen's pool, which is then split between thoroughbred, standardbred and quarter-horse racing at Michigan tracks.

Thoroughbred horsemen, however, pay an entry fee that standardbreds do not, Stommen said.

Offer for survival

The thoroughbred association approached Northville Downs with an offer that was better for the long-term survivability of the track, said John Carlo, director of operations.

In the short term, the new contract will shore up a lot of the track's losses, he said.

Northville Downs received $7.2 million of the $52.3 million bet at the track in 2012, according to its state reporting. That was down from $8 million in revenue on $56 million in wagers the year before.

Operations Manager Michael Carlo said the track had a net loss of $92,000 in 2012. He's projecting revenue for 2013 was down about 10 percent, and the track's net loss will have widened to nearly $300,000 when the numbers are final.

"We're running on a real short rope at this point," John Carlo said. "We had to take a new approach to keep Northville Downs open."

Based on the simulcast business the track does, it's clear fans wager more on thoroughbred races than standardbred, he said.

The track plans to hire another 15-20 employees to care for and handle the horses and to invest more than $250,000 to convert its racing surface.

Northville Downs expects an initial spike in interest from local fans. But to survive, it will need to keep them coming back, John Carlo said, so it's brought in a new concessionaire with a new menu and dining room.

Thoroughbred is a higher-cost proposition, Adkins said, with more people needed to care for, lead and line up the horses at the starting gates.

Hazel Park Raceway, which currently employs about 80, plans to hire another 20-40 employees to help care for and handle the horses. It also plans to invest between $600,000 and $1 million this year to convert the track from a limestone base to a sand track, and to more than double its local advertising budget to about $500,000, from $200,000, Adkins said.